Fixed term lease break
Question from Kim updated on 24th September 2018:
I have tenants who signed up for a nine month fixed term back. They have now bought a house and want to get out of their contract. I am happy for them to do so provided I can find replacement tenants. They haven't completely moved out and I have a property manager who has advertised the house, but so far we have not found a tenant who doesn't have a bad credit rating.
The tenants are now threatening me, saying that unless they are released from the contract they will serve a 14 day notice on me to make me do some work on the house. I'm not sure what it is, as they never complained about anything while they were living there. Could you please tell me what to do as it seems my only option is to sell the property?
Our expert Jennifer Sykes responded:
A fixed term tenancy can only be ended early by mutual agreement or by order of the Tenancy Tribunal. Some exceptions apply, such as where the property is destroyed or where there is a mortgagee sale situation. A landlord may agree that the tenants can be released at an earlier date or instead may attach the condition that the tenancy agreement will continue until new tenants are found to take over.
The landlord and tenant need to agree on whether new tenants taking over will be by assignment of the remaining portion of the fixed term to a new tenant, or on a whole new agreement with different terms (for example a whole new fixed term). A landlord must not unreasonably withhold their consent to a tenant’s request, unless the tenancy agreement states the tenant cannot do this. The landlord may attach reasonable conditions as part of their consent.
It is important that the tenant and landlord understand each other’s expectations and get this understanding in writing. Under the rules of assignment the landlord can require the tenant to pay all reasonable costs associated with finding replacement tenants. This may include (but is not limited to) advertising costs and credit checks.
During the assignment process, landlords and tenants still need to meet their ongoing responsibilities under the RTA. Either party may issue a 14-day Notice to Remedy (or breach letter) for any breaches of the tenancy agreement, which may include maintenance work or rent owed. If the tenants believe that the landlord’s actions are unreasonably preventing new tenants taking over, or if the landlord believes the tenants are not complying with the tenancy agreement or any reasonable conditions attached to ending the fixed term early, then either party may apply to the Tenancy Tribunal to have the dispute resolved.
You will need to inform the current or prospective tenants in writing if you choose to sell the premises.The Ministry of Business, Innovation and Employment provides information and guidance on building law and compliance, services including weathertight homes, and advice for tenants and landlords.